One by one, Julia Gillard is putting in place the pieces of her strategy for Labor’s 2013 re-election.

The normal time for the election to be held is around August next year. But anyone who has spent more than a few minutes reflecting on the huge amount of work that Gillard has done already could not help but be struck by the fact that she will be ready for an election much earlier than that.

Only weeks ago it seemed pure fantasy to think Gillard might go to the polls before the last possible moment, but the Canberra sands are shifting. Some influential people on the Labor side are beginning to believe an early poll – as soon as March – might become a realistic option.

In the Canberra political hothouse, of course, it is easy to lose perspective. Sudden shifts in the polls have exaggerated effects. What at the time might be seen as a decisive event can look very much less than that as time passes.

This may well be the case with what has happened recently.

Since July 1 and the beginning of what Gillard calls the electorate’s “lived experience” of the carbon tax, the mood within the major parties has changed significantly.

The day after Gillard had unveiled the government’s Australia in the Asian Century white paper, Tony Abbott chose in Parliament to ignore it. He stuck with the issues which have been the themes of his leadership – carbon tax, border protection and Gillard’s integrity.

The day’s politics took place under the shadow of the latest Newspoll, which showed the major parties tied on a two-party preferred basis.

Abbott’s strategy suddenly looked wrong.

He looked lead-footed, as though he was holding a stale political hand.

Labor MPs were understandably buoyed by this.

Gillard seemed finally to be gaining the ascendency. Abbott the dominant had suddenly become Abbott the vulnerable.

But as the mood on the Labor side turned more positive than it has been since the early days of Gillard’s leadership, it was accompanied by a sudden nervousness.

What if Gillard’s ascendency continues to increase, to the point where the Coalition loses confidence in Abbott? Horror of horrors! What if they dump Abbott and reinstate Malcolm Turnbull?

In the never-ending conversation about political leadership which preoccupies Canberra insiders, the starting point question for a year or more has been whether Gillard can survive to lead Labor to the next election.

Abbott’s leadership had been seen as potentially vulnerable only if Kevin Rudd returned and his good standing with voters turned the polls around.

This week this conversation turned upside down.

Suddenly, it seemed possible that Abbott’s position might become vulnerable.

Some on the Labor side are convinced that Abbott is Gillard’s best asset. Were he to go, Labor might have to look to Rudd again.

It would therefore be in Gillard’s best interests to ensure that Abbott is her opponent at the next election – not Turnbull or even Joe Hockey, the “stop Turnbull” candidate some Liberals prefer in the event that Abbott’s leadership blows up.

The logic then goes that the sooner Gillard can have the election the greater the likelihood that Abbott will still be Opposition Leader.

This, of course, is the sort of musing that outsiders hate about Canberra politics.

But leadership is critically important in the calculations of both sides of politics about the way the countdown to the next election is likely to unfold.

Unusually in Australian politics, the leaders of both the major parties rate poorly with voters.

Both Gillard and Abbott work under the shadow of alternative leaders who are clearly more popular with the electorate than they are.

Each side needs to be aware of the risk that the other will switch leaders, especially now that electoral pragmatism has seen the bar of tolerance for poor leadership sunk to a historically low level (with the dumping of Rudd).

But there are other important reasons why the idea of an early election is likely to gain appeal for Gillard if the recent trend to Labor in the polls continues.

Election year is looming as another year of serious economic uncertainty.

The election year federal budget is already shaping as a brute.

Even if good fortune prevails and the economic situation is benign, the government faces horrendous problems coming up with a formula which can deliver its big spending policy agenda and a budget surplus with a shrinking revenue base.

This past week, the government’s predicament has been exposed by the reluctance of both Gillard and Treasurer Wayne Swan to repeat iron clad commitments to deliver a 2012-13 surplus.

A case could be made that it would be better for the economy for the election to be held before the budget is brought down in May to allow the Treasurer to deliver the budget the economy needs, rather than one drafted under the shadow of a looming election.

There is another factor in this.

John McTernan, Gillard’s political strategist, was an insider in the British Labour Party in 2007 when Gordon Brown “bottled it” and disastrously decided not to call an early election when the polls briefly favoured him.

So watch the polls and hold on to your hat if Labor has its nose in front in March.

The Australian Financial Review

BY Geoff Kitney

Geoff is a senior national affairs writer and columnist in
our Canberra bureau.